Are you under claiming your work related expenses?
This time every year the ATO conducts a media campaign about taxpayers who make inappropriate tax deductions and the favourite topic this year is again work related expenses.
But we find taxpayers often do not claim their entitlements. Too often the focus is on work related deductions while making much more significant errors.
Work related expenses are split into various categories to an income tax return, including:
Laundry, uniform and protective clothing;
‘Other’, such as professional subscriptions, mobile phone expenses etc;
Other claims such as donations, income protection insurance and interest paid to the ATO, do not form part of work related expenses.
Some people think if they have claimed $50 for a donation they have made, they can only claim $250 for ‘other work related expenses’.
Providing you have not claimed any other work related claims and you have actually incurred at least $300 for work (eg stationery, mobile phone, internet etc), then you do not need to have kept full substantiation records, for the $300.
Your total claims in this case, is $350. You should have a receipt for the $50 donation, and you are only claiming $300 ‘work related’ costs.
Surprise … a donation, is not a work related cost.
If you are not claiming legitimate expenses you have incurred for work purposes, then you are paying too much tax. And you are subsidising your employer who is not reimbursing you for your work related costs, and you are subsidising other taxpayers who are claiming their entitlements.
You should not fear claiming your entitlements.
Equally, you should fear missing other things that you are not reporting, that you should, but don’t even know … for more, see our next post “Naughty Claims and Non-Disclosures”.